This is an application for a K01 award for Dr. Chengran Xu, a Research Associate in the department of Cell and Development Biology at the University of Pennsylvania, Philadelphia. Dr. Xu's long-term goal is to become an independent developmental biologist and leader in the studies of cell differentiation during liver and pancreas development. Dr. Xu has a broad background and specific training in genetics, developmental biology, immunology and embryology. This K01 award will provide Dr. Xu with the support to accomplish the following goals: (1) to perform genomic and bioinformatics analysis of genome-wide chromatin states during cell specification; (2) to conduct mouse and human ES cell cultures and induction to differentiate into particular cell lineages; (3) to develop an independen developmental biology research career. To achieve these goals, Dr. Xu will be directed by Dr. Ken Zaret, the Associate Director of the Institute for Regenerative Medicine and Co-Director of the Epigenetics Program at University of Pennsylvania, who is an internationally renowned developmental biologist. Dr. Xu will collaborate with Drs. Gordon Keller (University of Toronto) and Paul Gadue (Children's hospital of Philadelphia), who are internationally recognized experts in the field of lineage specific differentiation of ES Cells. Dr. Xu's research will focus on the mechanism of chromatin regulations of liver and pancreas specification and development during embryogenesis, and use such information, along with direct perturbations of chromatin modifiers, to improve the inductions of endoderm, hepatic and beta cells from ESCs. Dr. Xu's preliminary studies revealed that the poised liver and pancreas genes in endoderm have distinct pre-pattern of chromatin marks. Genetic and pharmacologic studies show that the number of liver progenitors in the endoderm is modulated by the histone acetyltransferase P300, recruited via BMP signaling, and by the histone methyltransferase Ezh2, which suppresses pancreas progenitors. Dr. Xu proposes to determine the mechanism of the diminishing of the EZH2-catalyzed repressive chromatin modification from pancreatic elements, thereby eliciting pancreas specification during early development (Aim 1); to perform genome-wide (ChIP-seq) studies to understand how the chromatin modifies mediating inductive signals to regulate endoderm differentiation (Aim 2); and using the chromatin mark information from the preliminary studies, to modify the induction of endoderm and hepatic and pancreatic progenitors derived from human ES cells to improve the efficiency to differentiate into specific liver and pancreas cell lineages (Aim 3). These studies will help us better understanding the programs for liver and pancreas development in embryogenesis and instruct us to enhance the inductions of liver or pancreas lineages for cell therapy of liver and pancreatic deceases.